New Market: Florida’s big MMJ program could be limited by lack of licenses

This is the fourth article in a series looking at the potential cannabis market in each of the eight states that approved recreational or medical marijuana initiatives in the 2016 election. Check back each week through mid-January for new entries. Click here for previous installments.

By Bart Schaneman

Florida’s new medical marijuana market is poised to become one of the largest in the nation, yet a limited number of available MMJ business licenses could hinder the program’s growth.

Seventy-one percent of Florida voters last month approved Amendment 2 to legalize a much broader MMJ program in the nation’s fourth most populous state.

Within a few years after the program’s launch, annual sales via dispensaries in Florida could hit $600-$800 million, according to initial estimates by Marijuana Business Daily. The program is scheduled to roll out in 2017.

Last month’s yes vote follows a narrow loss for MMJ advocates two years earlier. It builds on an existing but program mainly limited to CBD-based medicine.

In 2014, Florida’s legislature approved a CBD bill authorizing five business licenses in the state and a limited list of qualifying medical conditions. Last spring, lawmakers authorized terminally ill patients for high-THC use. A sixth license was added.

Amendment 2 opens the possibility of many more licenses. Moreover, dispensary, cultivator and other licenses could be available separately versus the current vertically integrated model. The amendment also doesn’t include a residency restriction for businesses, making it an attractive opportunity for expansion-minded executives at cannabis companies in other states.

And Florida’s market potential could mean plenty of opportunities for ancillary businesses ranging from lighting and testing companies to legal and accounting firms.

But how long it will take for the industry to develop and meet patient demand is a big unknown. Currently, the six vertically integrated businesses must serve a state with more than 20 million people and a huge senior population.

Under existing law, three additional MMJ licenses are planned to become available when the eligible patient pool reaches 250,000. One of the three is dedicated to minority farmers.

Much also will depend on the extent to which “pain” can be treated with MMJ – a condition that can boost the patient pool and sales.

State lawmakers and the Florida Department of Health will be responsible for writing the regulations governing the market. Therefore many details aren’t yet known.

“This is a gigantic, gigantic opportunity if we do it the right way,” said Ben Pollara, executive director of United for Care and manager of the MMJ campaign. “The opportunity before us is to create the gold standard medical marijuana law.”

Business opportunities

The big question is whether the amendment will produce more licenses for additional business owners, or will the six existing businesses try to supply everything?

Under Amendment 2, there is no limit on the number of dispensaries a license holder can own, meaning that existing licensees could open as many dispensaries and cultivation operations as they want.

“The existing dispensaries probably feel like they can meet the demand,” said Jeff Sharkey, executive director of the Medical Marijuana Business Association of Florida.

But the amendment states that Florida must have a reasonable number of “medical marijuana treatment centers,” or dispensaries, to meet patient demand.

The existing licensees are going to fight “tooth and nail to keep it to six,” Pollara said.

Local governments, meanwhile, need to determine zoning, security, location, and other regulations.

Another key concern for business owners is that smokable flower may not be allowed, according to interpretations of the amendment.

Sharkey does anticipate robust opportunities for ancillary companies, encompassing the whole range of businesses the industry has seen so far. “It’s going to be a big business,” he said.

Number, type of licenses 

Sharkey has seen estimates that Florida will need up to 40 licensees, based on production capabilities and patient needs.

Under Amendment 2:

  • Each licensee can cultivate anywhere they want and open as many dispensaries as they want – anywhere in the state.
  • Licenses could become available for dispensaries, growers, distributors, etc. versus the existing vertically integrated model. The state must work out the details.

The state currently isn’t accepting applications. When it took applications a year and a half ago, 28 applied. Those wanting a permit will probably contend the existing six licensees aren’t enough to serve 20 million people, Sharkey said.

“These (six) licensees have been waiting to see if Amendment 2 would pass, because the patient base has been relatively small under the original legislation,” Sharkey said. “And they have a major investment.”

Conditions list, patient count 

Amendment 2 offers a much broader patient base than the existing conditions list.

The new qualifying conditions include:

  • Cancer
  • Epilepsy
  • Glaucoma
  • HIV/AIDS
  • PTSD
  • ALS
  • Crohn’s disease
  • Parkinson’s disease
  • Multiple sclerosis

The amendment also gives doctors the discretion to determine whether other conditions can be treated with MMJ, which could expand the patient pool more.

Amendment 2 should also make it easier for more doctors to recommend MMJ. The legislature is expected to fix existing language stipulating that only qualified doctors, estimated at about 200, who’ve taken an eight-hour course can be certified to recommend MMJ.

According to Marijuana Business Daily estimates, the potential patient pool could total 100,000-300,000.

The ultimate number will depend on how many doctors participate and how the state and doctors ultimately handle the “pain” part of the medical conditions list.

Timeline

Amendment 2 takes effect Jan. 3. It prescribes two deadlines:

  1. Six months after Jan. 3, the state health department must issue regulations for patient and caregiver ID cards as well as the licensing of dispensaries.
  2. Within nine months, the health department must begin implementing the regulations, distributing ID cards, issuing business licenses and basically allowing the MMJ system to launch.

The legislature is expected to advise the department on drafting the rules and implement components of Amendment 2.

Biggest challenges

Much will depend on how lawmakers and regulators finalize the rules governing the industry.

If the industry remains in the hands of six license holders, it will take a long time to develop adequate supply to meet the demand.

“This is all new and we’re a big state,” Sharkey said. “It’ll take some time to ramp up.”

Bart Schaneman can be reached at [email protected]

10 comments on “New Market: Florida’s big MMJ program could be limited by lack of licenses
  1. Isaiah Abenchuchan on

    Under current law, smokable flower is not allowed. However, nothing in the Amendment 2 text prohibits the consumption of smokable flower.

    Reply
  2. Bill on

    Just having only 6 producers. Is giving only a few big companies rights to this market. What about delivery services, Small online stores, CBD & herbal stores only? Will each person who wants to dist. in Fla have to pay 5 million like the 6 chosen?

    Reply
  3. Sterling McVay on

    There is ABSOLUTELY ‘No Way’, 6 Licensees can ‘meet Demand’. And I ‘want’ in on the Market, with a Cultivation Center and, at least, 2 Dispensaries. Will ‘only’ do, All Organic.

    Reply
  4. Eric on

    Pay for play politics. Only 6 dispensieries. Lol. Anyone who applies and is in good standing should be allowed to open. This is the USA with free enterprise. Ugh the corruption already. MAGA

    Reply
  5. Lewis on

    As a physician and cancer patient, I am looking for this program to be operational ASAP. That being said, the politics and all the issues involved will slow the process to a crawl. Liability for the dispensers and certifying physicians is of concern. If a doctor certifies a patient for MMJ and that patient is involved in a fatal accident, is that physician liable also since the patient will have a positive drug screen?? And of course the physician is in theory contributing to federal laws being broken. Many question still unanswered.

    Reply
  6. Barry Gainsburg on

    The Govenor, who is heavily staked in the status quo pharmaceutical corporate medical industry, being a former high ranking executive therein doesn’t care about YOU as a Patient or entrepreneur Nor Amendment 2. The legislature, besides a few good folk on both sides of the aisle, don’t care about YOU either nor Amendment No. 2. Talk to I. [email protected]. ???

    Reply
    • David Silverstone on

      Legalized mj is about simple economics: there is a great demand. Those with large amounts of money desire to profit greatly from the demand. Perhaps there will be an opportunity for small dispensaries or growers to enter the field, but it’s the big money who got the amendment on the ballot and lobbied, and to the victor goes the spoils. Even in states like CO with recreational use, there are high licensing fees and bonds, and banks are not lending. I am a lawyer, and I think to get involved at this point you need to represent owners of the few dispensaries licensed in FL, some of the investors, or some of the established out of state businesses already established in the MMJ business.

      Reply

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